U.S. CUSTOMS BORDER PROTECTION PROVIDES GUIDANCE ON NEW U.S. TARIFFS
The United States has announced an increase in tariffs on products of the China and Hong Kong along with the implementation of tariffs on products of Canada and Mexico, effective March 4, 2025.
Guidance published by Customs & Border Protection (CBP) on March 3, 2025, resolves uncertainties regarding implementing these new/increased tariffs.
China & Hong Kong: IEEPA tariffs increased from 10% to 20% under the March 3, 2025, Executive Order. CBP has confirmed that the additional 10% is not retroactive.
Canada & Mexico: A 25% tariff on most products of Canada and Mexico and a 10% tariff on Canadian energy products go into effect on March 4, 2025, following a one-month delay.
CHINA & HONG KONG: CBP CONFIRMS TARIFF EFFECTIVE DATES
On March 3, 2025, CBP released a late-night formal guidance confirming that the additional 10% IEEPA tariff applies to entries for consumption or withdrawn from warehouse for consumption on or after March 4, 2025, bringing the total IEEPA tariff to 20% (10% + 10%).
This guidance provides clarity on the following concerns regarding the new 10% tariff:
- A 10% tariff remains in effect for goods entered between February 4, 2025 – March 3, 2025 (HTSUS 9903.01.20).
- An additional 10% applies to entries for consumption or withdrawn from warehouse for consumption on or after March 4, 2025, bringing the total IEEPA tariff rate to 20% (HTSUS 9903.01.24).
Key Compliance Factors for China and Hong Kong-Origin Imports
- Foreign Trade Zones (FTZ): Products of China or Hong Kong, admitted after February 4, 2025, must be designated as “privileged foreign status,” locking in duty and tariff rates at the time of admission.
- De Minimis Shipments: CBP confirmed that de minimis treatment remains available for eligible imports, including those sent through the international postal network.
- Exclusions: Humanitarian aid (HTSUS 9903.01.21), informational materials (HTSUS 9903.01.22), and goods in transit before February 1, 2025 (HTSUS 9903.01.23) remain exempt.
- No Duty Drawback: CBP confirmed the additional 10% follows the same rule as the original 10%—no drawback is available.
CANADA & MEXICO: NEW U.S. TARIFFS TAKE EFFECT MARCH 4, 2025
The U.S. tariffs on imports from Canada and Mexico, announced initially alongside those on China and Hong Kong, were delayed by one month to allow border security and trade enforcement negotiations. With the grace period now over, full enforcement begins on March 4, 2025.
Canada: HTSUS Classifications & Tariff Rates
- A 25% tariff on most imports (HTSUS 9903.01.10)
- A 10% tariff on energy imports (HTSUS 9903.01.13)
- Exemptions for donations (HTSUS 9903.01.11)
- Exemptions for informational materials (HTSUS 9903.01.12)
- De Minimis treatment remains available for otherwise eligible shipments.
Mexico: HTSUS Classifications & Tariff Rates
- A 25% tariff on most imports (HTSUS 9903.01.01)
- Exemptions for donations (HTSUS 9903.01.02)
- Exemptions for informational materials (HTSUS 9903.01.03)
- De Minimis treatment remains available for eligible shipments.
Temporary De Minimis Exemptions Still in Place for Eligible Canada, Mexico Imports
While de minimis entry remains temporarily available for eligible parcels, businesses should not rely on it long-term. CBP and the Department of Commerce are finalizing a full enforcement framework, which is expected to phase out these exemptions.
U.S. TARIFF TRADE IMPACTS
The new tariffs on China, Hong Kong, Canada, and Mexico are already disrupting supply networks, increasing costs, and adding layers of Customs complexity. Businesses should take proactive steps now to minimize risk.
Key Considerations:
- Higher landed costs for affected goods, with importers absorbing 10% + 10% (20%) from China & Hong Kong and 25% from Canada & Mexico.
- Potential Customs processing delays as CBP enforces updated classifications and tariff rates.
- Increased scrutiny on FTZ and bonded warehouse operations, where duty and tariff rates at the time of admission could significantly impact cost planning.
U.S. TARIFFS ON CHINA, CANADA, AND MEXICO: STRATEGIES FOR ADAPTING SUPPLY NETWORKS TO MITIGATE COST AND DELAYS
While challenging, the new trade climate provides opportunities for importers to reevaluate their supply chains to improve efficiencies while mitigating increased tariffs and avoiding delays. From nearshoring to supplier diversification to utilizing consolidation shipments, importers have a bevy of tools available to streamline their global supply networks.
Some cost-mitigating measures to consider include:
Bonded Warehousing – Deferring duty payments while monitoring potential regulatory shifts.
Supplier Diversification – Exploring alternative sourcing outside China, Hong Kong, Canada, and Mexico.
Enhanced Trade Compliance Measures – Ensuring accurate HTS classification, valuation, and country-of-origin declaration to mitigate risks.
Partnering with a trusted logistics expert will ensure compliance with evolving regulatory changes while utilizing their experience to create custom solutions to ensure materials move seamlessly through the global supply chain.
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